Elgin / IL. (tmc) The Middleby Corporation, a leading worldwide manufacturer of equipment for the commercial foodservice, food processing and residential kitchen industries, reported net sales and earnings for the second quarter ended July 04, 2015. Net earnings for the second quarter were 54’267’000 USD or 0.95 USD per share on net sales of 436’291’000 USD as compared to the prior year second quarter net earnings of 48’405’000 USD or 0.85 USD per share on net sales of 424’776’000 USD.
2015 Second Quarter Financial Highlights
- Net sales increased 2.7 percent compared to the prior year second quarter. Sales related to recent acquisitions added 7.6 percent for the quarter offset by the impact of foreign exchange rates on foreign sales translated into U.S. Dollars, which reduced net sales by approximately 2.8 percent during the second quarter of 2015. Excluding the impact of acquisitions and foreign exchange changes, net sales declined 2.1 percent as compared to the prior year quarter.
- Net sales at the company’s Commercial Foodservice Equipment Group increased 24.9 million USD, or 9.4 percent, to 288.8 million in the second quarter as compared to 263.9 million USD the prior year second quarter. During fiscal 2014, the company completed the acquisition of Concordia. During fiscal 2015, the company completed the acquisitions of Desmon, Goldstein Eswood, Marsal and Induc. Excluding the impact of these acquisitions, sales increased 5.3 percent in the second quarter, or by 7.9 percent on a constant currency basis, adjusting for the impact of foreign currency translation in comparison to the prior year quarter.
- Net sales at the company’s Food Processing Equipment Group decreased by 18.0 million USD, or 20.0 percent, to 71.9 million USD in the second quarter as compared to 89.9 million USD the prior year second quarter. During fiscal 2015, the company completed the acquisition of Thurne. Excluding the impact of this acquisition, sales decreased by 27.0 percent in the second quarter, or 22.5 percent on a constant currency basis.
- Net sales at the company’s Residential Kitchen Equipment Group increased by 4.6 million USD, or 6.5 percent, to 75.5 million USD in the second quarter as compared to 70.9 million USD in the prior year second quarter. During fiscal 2014, the company completed the acquisition of U-Line. Excluding the impact of this acquisition, sales decreased by 14.4 percent in the second quarter, or 13.3 percent on a constant currency basis.
- Gross profit in the second quarter increased to 172.9 million USD from 166.2 million USD, reflecting the impact of higher sales volumes, offset by the impact of foreign exchange rates. The gross margin rate increased to 39.6 percent from 39.1 percent. The net increase in gross margin rate reflects the benefit of acquisition integration initiatives with improved margins at the Residential Kitchen Equipment Group.
- Operating income increased 10.1 percent in the second quarter to 79.7 million USD from 71.4 million USD in the prior year quarter. Operating income included 4.6 million USD of non-recurring charges associated with recent restructuring initiatives and dispute settlement costs.
- Non-cash expenses included in operating income during the second quarter of 2015 amounted to 16.5 million USD, including 4.2 million USD of depreciation, 6.9 million USD of intangible amortization and 5.4 million USD of non-cash share based compensation.
- A tax provision of 25.4 million USD, at an effective rate of 31.9 percent, was recorded during the second quarter 2015, as compared to a 23.0 million USD provision at a 32.2 percent effective rate in the prior year quarter.
- Earnings per share of 0.95 USD included the impact of foreign exchange rate losses and restructuring expenses, which collectively reduced earnings per share by 0.07 USD per share. Excluding the impact of these items, earnings per share increased by 20. percent, to 1.02 USD per share.
- Total debt at the end of the second quarter amounted to 639.0 million USD as compared to 598.2 million USD at the end of the fiscal 2014. The net increase in debt includes acquisition related financing related to Desmon, Goldstein Eswood, Marsal, Thurne and Induc acquired during the second quarter.
Selim A. Bassoul Chairman and Chief Executive Officer, commented, «In the second quarter at our Commercial Foodservice Equipment Group, we continued to see strong sales growth with our chain restaurant customers adopting our new and innovative technologies as they seek to improve the efficiency of their restaurant operations. We maintained our strong profitability in this segment while we integrate five businesses acquired in this segment during the past year».
Bassoul continued, «At our Food Processing Equipment Group, lower reported sales reflect the timing impact of large orders in comparison to the prior year. Given the nature of this business, we have historically seen volatility on a quarter over quarter basis. Additionally, as approximately half the revenues of this business are in international markets, and as a result, strengthening of the U.S. Dollar has had the greatest impact on reported sales. Despite the sales decline, we continue to see a strong pipeline of project opportunities and have realized an increase in order rates of 20 percent over the first six months of last year, which should favourably impact the second half. We also continued to realize profit margin improvement at this segment with Ebitda margins of approximately 23.0 percent in the quarter».
Bassoul added, «At our Residential Kitchen Equipment Group, lower sales reflect the anticipated impact of non-core products that were discontinued in connection with the prior year Viking distributor acquisitions and lack of product availability related to the new line of Viking refrigeration during initial production start-up in the first half of 2015. We are excited about the growth potential for the new line-up of Viking ranges, cook-tops, ovens and refrigeration. These innovative, new-to-market appliances have generated much attention over the past year, and we would expect improved sales as these products continue to penetrate and gain acceptance in the market».